Networks and the Macroeconomy: An Empirical Exploration

Daron  Acemoglu; Ufuk  Akcigit; William R. Kerr

Chapter | NBER Macroeconomics Annual 2015, Vol. 30 | 2016

Networks and the Macroeconomy: An Empirical Exploration

by Daron Acemoglu, Ufuk Akcigit and William R. Kerr

Abstract

The propagation of macroeconomic shocks through input-output and geographic networks can be a powerful driver of macroeconomic fluctuations. We first exposit that in the presence of Cobb-Douglas production functions and consumer preferences, there is a specific pattern of economic transmission whereby demand-side shocks propagate upstream (to input-supplying industries), and supply-side shocks propagate downstream (to customer industries), and that there is a tight relationship between the direct impact of a shock and the magnitudes of the downstream and the upstream indirect effects. We then investigate the short-run propagation of four different types of industry-level shocks: two demand-side ones (the exogenous component of the variation in industry imports from China and changes in federal spending) and two supply-side ones (TFP shocks and variation in knowledge/ideas coming from foreign patenting). In each case, we find substantial propagation of these shocks through the input-output network, with a pattern broadly consistent with theory. Quantitatively, the network-based propagation is larger than the direct effects of the shocks. We also show quantitatively large effects from the geographic network, capturing the fact that the local propagation of a shock to an industry will fall more heavily on other industries that tend to collocate with it across local markets. Our results suggest that the transmission of various different types of shocks through economic networks and industry interlinkages could have first-order implications for the macroeconomy.

Keywords: economic fluctuations; geographic collocation; input-output linkages; networks; propagation; shocks; Networks; Fluctuation; System Shocks; Macroeconomics;

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Citation:

Acemoglu, Daron, Ufuk Akcigit, and William R. Kerr. "Networks and the Macroeconomy: An Empirical Exploration." In NBER Macroeconomics Annual 2015, Vol. 30, edited by Martin Eichenbaum and Jonathan Parker, 273–335. Chicago, IL: University of Chicago Press, 2016.

Case | HBS Case Collection | July 2019 (Revised May 2020)

AT&T, Retraining, and the Workforce of Tomorrow

William R. Kerr, Joseph B. Fuller and Carl Kreitzberg

By the late 2000s, rapid changes in the telecommunications industry forced AT&T’s management team to take on a task that CEO Randall Stephenson called the “biggest logistical challenge” they had ever seen: retraining 100,000 workers by 2020. In 2012, internal company analyses found that AT&T’s workforce would lack the skills it needed to fulfill emerging job requirements. AT&T responded by creating “Workforce 2020,” a company-wide initiative that sought to address potential skill shortfalls. The initiative aimed to transform AT&T’s workforce by implementing multiple changes, such as redesigning job roles, developing new educational curricula with Udacity, and incentivizing employees to retrain themselves for high-demand careers. Some gave high praise to the “Workforce 2020” model, going so far as to call it a new “social contract” between employers and employees. Others worried that the new program was systematically disadvantaging specific groups of workers. In 2018, AT&T rebranded Workforce 2020 to “Future Ready,” signaling the company’s commitment to retraining its workforce beyond 2020.

Keywords: AT＆T; workforce; skills; future of work; telecommunications; Unions; technological change; layoffs; MOOCS; Strategic Planning; Employees; Training; Competency and Skills; Labor; Learning; Labor Unions; Technology Adoption; Talent and Talent Management; Telecommunications Industry; Communications Industry; United States;

Citation:

Kerr, William R., Joseph B. Fuller, and Carl Kreitzberg. "AT&T, Retraining, and the Workforce of Tomorrow." Harvard Business School Case 820-017, July 2019. (Revised May 2020.) View Details

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Talent is a critical resource for today’s knowledge economy. The United States has benefited substantially from high-skilled migration since the 1970s, especially with respect to innovation and entrepreneurship. This chapter reviews data on these immigrant contributions, and it discusses the important roles played by universities and firms under the American system. The chapter concludes with ways that U.S. immigration policy could be enhanced, which will become more important as other nations become more competitive for global talent.

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Networks and the Macroeconomy: An Empirical Exploration

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